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on Law and Economics |
| By: | David Schap (Department of Economics, College of the Holy Cross); Andrew Feeley (Department of Economics, College of the Holy Cross) |
| Abstract: | The collateral source rule is a common law norm that permits recovery of accident-related damages from both the victim’s insurer and the injurer. Many jurisdictions have modified the rule through statutory reform during the last twenty-five years. Forensic economists in assessing damages need to be aware of the variations in the application of the rule in the jurisdictions in which they practice. The authors present a tabular summary of the statutory variations that exist in the collateral source rule across state jurisdictions and the detailed status of the statutory modifications to the rule for each state. |
| Keywords: | forensic economics |
| JEL: | K13 |
| Date: | 2006–06 |
| URL: | http://d.repec.org/n?u=RePEc:hcx:wpaper:0605&r=law |
| By: | David Schap (Department of Economics, College of the Holy Cross); Andrew Feeley (Department of Economics, College of the Holy Cross) |
| Abstract: | According to Posnerian law and economics, common law (i.e., judge-made law) tends to promote efficiency. Public choice teaches that statutory (legislated) law need have no such efficiency property because, unlike appointed judges, legislators are subject to short election cycles and are beholden to special interests for election and re-election. The collateral source rule is a common law norm that permits an injured party to recover damages from both the tortfeasor (injurer) and from private insurance. Published work in the law and economics literature indicates that despite an appearance that the rule permits unwarranted double recover, the rule is indeed generally efficient. Despite its efficiency properties, the rule has been modified by statute in many jurisdictions in recent decades. Insurers reap transitory gains if exceptions to the collateral source rule are granted by statute whereas medical care providers achieve an ongoing gain if their sector is specifically excluded from the rule's application. The authors report the results of their exhaustive survey of statutory law concerning the collateral source rule in the fifty states, District of Columbia, Puerto Rico and Virgin Islands. The categorized findings reveal significant exceptions to the collateral source rule introduced into statutory law to the benefit of the special interests identified. |
| Keywords: | forensic economics |
| JEL: | K13 D72 |
| Date: | 2006–06 |
| URL: | http://d.repec.org/n?u=RePEc:hcx:wpaper:0606&r=law |
| By: | Leigh L. Linden; Jonah E. Rockoff |
| Abstract: | We combine data from the housing market with data from the North Carolina Sex Offender Registry to estimate how individuals value living in close proximity to a convicted criminal. We use the exact location of these offenders to exploit variation in the threat of crime within small homogenous groupings of homes, and we use the timing of sex offenders’ arrivals to control for baseline property values in the area. We find statistically and economically significant negative effects of sex offenders’ locations that are extremely localized. Houses within a one-tenth mile area around the home of a sex offender fall by four percent on average (about $5,500) while those further away show no decline. These results suggest that individuals have a significant distaste for living in close proximity to a known sex offender. Using data on crimes committed by sexual offenders against neighbors, we estimate costs to victims of sexual offenses under the assumptions that all of the decline in property value is due to increased crime risk and that neighbors’ perceptions of risk are in line with objective data. We estimate victimization costs of over $1 million—far in excess of estimates taken from the criminal justice literature. However, we cannot reject the alternative hypotheses that individuals overestimate the risk posed by offenders or view living near an offender as having costs exclusive of crime risk. |
| JEL: | R2 K4 |
| Date: | 2006–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12253&r=law |
| By: | Louis Kaplow |
| Abstract: | The merits of capital levies depend on the likelihood of repetition, the extent of anticipation, and its effects on distribution. The relevance of these features, which in varying degrees is underdeveloped or underappreciated in pertinent literatures, is elaborated and then considered with regard to the problem of transition to a consumption tax. Other transition issues are distinguished, and specific attention is devoted to rate changes under a consumption tax and whether owners of preexisting capital are effectively compensated through higher net-of-tax returns due to repeal of the income tax. The analysis is also related to literature that examines dynamic models of taxation, particularly work simulating consumption tax transitions and assessing the optimality of capital taxation in the long run. |
| JEL: | H21 H23 H24 H25 K34 |
| Date: | 2006–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12259&r=law |
| By: | Jennifer Hunt; ; |
| Abstract: | Using detailed Peruvian data measuring bribery, I assess which types of public official are most corrupt and why. I distinguish between the bribery rate and the size of bribes received, and seek to explain the variation in each across public institutions. The characteristics of officials’ clients explain most of the variation for bribery rates, but none for bribe amounts. A measure of the speed of honest service at the institution explains much of the remaining variation for both bribery rates and amounts. The results indicate that the bribery rate is higher at institutions with bribe-prone clients, and that bribery rates and bribe amounts are higher where clients are frustrated at slow service. Faster and better service would reduce corruption. Overall, the judiciary and the police are by far the most corrupt institutions. |
| Keywords: | Corruption, bribery, institutions, governance. |
| JEL: | H4 K4 O1 |
| Date: | 2005–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wdi:papers:2005-790&r=law |
| By: | Jennifer Hunt; Sonia Laszlo; |
| Abstract: | We provide a theoretical framework for understanding when an official angles for a bribe, when a client pays, and the payoffs to the client’s decision. We test this frame work using a new data set on bribery of Peruvian public officials by households. The theory predicts that bribery is more attractive to both parties when the client is richer, and we find empirically that both bribery incidence and value are increasing in household income. However, 65% of the relation between bribery incidence and income is explained by greater use of officials by high–income households, and by their use of more corrupt types of official. Compared to a client dealing with an honest official, a client who pays a bribe has a similar probability of concluding her business, while a client who refuses to bribe has a probability 16 percentage points lower. This indicates that service improvements in response to a bribe merely offset service reductions associated with angling for a bribe, and that clients refusing to bribe are punished. We use these and other results to argue that bribery is not a regressive tax. |
| Keywords: | Corruption, bribery, institutions, governance. |
| JEL: | H4 K4 O1 |
| Date: | 2005–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wdi:papers:2005-792&r=law |
| By: | Tamura, Yuji (Department of Economics, University of Warwick) |
| Abstract: | Akerlof’s (1970) model of asymmetric information is adapted for the migrant smuggling market where smugglers differ in their capacities to exploit their clients in the destination. Migrants may gain a greater surplus when informationally disadvantaged than under symmetric information, which can be a source of the market’s prosperity. We show a static equilibrium where both exploitative and non-exploitative smugglers are active is subject to adverse selection in the long run in an environment where migrants trust social networks and distrust exploitative smugglers. We predict the market may converge to a stable state where only exploitative smugglers are active due to the very information transmission through social networks that is commonly used to evade hiring exploitative smugglers. Exploitative and non-exploitative smugglers then coexist only temporarily. Policymakers are likely to face a dilemma of whether to reduce the exploitation of smuggled migrants or the availability of smuggling services, for there seems to be a trade-off between these. |
| Keywords: | irregular migration ; migrant smuggling ; migrant trafficking ; adverse selection |
| JEL: | F22 J61 D82 L15 K42 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:730&r=law |